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Hammer Pattern

Classic Pattern

This pattern as the name suggests looks like a hammer with a small body with a long tail or shadow below the body but no or little shadow above the body. Although the candle has a substantial low, by the end of the day it moves to a high.

This pattern usually occurs at the end of a downtrend and signals a reversal in the trend. It shows that the bulls have fought the low and managed to push the buying to a high. To confirm this bullish pattern further you would need the next day also to finish on a high.

Please click on picture above to get a larger picture

Most candlestick patterns should appear close to previous resistance or support levels depending on what type it is. You should only trade a candlestick pattern if it's near these levels.

Don't trade using these patterns if it's not at the top or bottom of a trend. These patterns appear a great deal so you have to make certain you only trade at the right level.

This is very important as you will end up over trading them and you will end up losing more money than you imagined.

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